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De-Risking Innovation in the Built Environment

Updated: Jul 8, 2020

According to a recent McKinsey & Company study*, the construction industry invests in R&D at a rate far lower than that of other industries.

As an Engineer and Marketer, I've spent the last 20 years advocating and executing innovation in the built environment (building product & systems manufacturing, energy efficiency, residential and commercial construction, and real estate). In that time, I have observed a couplet of truths that I believe explains this aversion to innovation investment in our industry:

  1. Innovation is notoriously risky. Most innovation approaches involve a whole lot of guesswork, "fuzzy front ends," questionable "Voice of Customer" research, intuition, and unstructured "creative thinking." This all adds up to a very high-risk activity that yields predictably low returns on investment, and sometimes devastating failure, even in high-margin industries.

  2. Construction companies don't need more risk. With razor-thin net profits combined with significant ongoing operating risk, most organizations in the construction value chain are loathe to increase their risk profile any further. In fact, much of the current fragmented value delivery model implemented in the industry is specifically designed to broker and offshore as much risk as possible to other parties in the chain.

When you add these two facts together, it's no wonder that construction industry executives aren't too excited about writing a check for "innovation." From their perspective, they might as well plunk all their profits down at a roulette wheel.

And yet, they know that they MUST innovate if they are to survive and thrive as the industry is transformed and disrupted.

So what to do?

My work experience and education have exposed me to a unique mix of insights and methodologies that I believe combine to offer a solution to construction's innovation conundrum:

  • An Engineering degree taught that every problem can be made solvable by breaking it down into its component parts and bringing analytical thinking to bear against it.

  • An MBA taught the power of data in enabling visibility and clarity on an issue and the hidden interactions uncovered by Systems Thinking.

  • Training in Lean Six Sigma revealed how a systematic, methodical approach can eliminate waste and errors in any process.

  • Invaluable lessons in the precision of Jobs-To-Be-Done innovation theory have been gleaned from such luminaries as Clayton Christensen, Peter Drucker, Tony Ulwick, and Stephen Wunker.

As I've reflected on these disciplines, lessons, and insights as a whole, I believe they contain the innovation "Holy Grail" that our industry has been seeking: A way to innovate with low cost, high speed, high precision, high success, and most of all, LOW RISK.

I call this hybrid, cross-discipline approach to construction innovation Engineerovation™. It uniquely combines the amphibious education, experiences and expertise of a commercially-minded engineer who understands the construction industry. It melds Jobs-To-Be-Done innovation theory with Lean Six Sigma process optimization methods to turn innovation into a science, enabling you to succeed at innovation WITHOUT betting your company's survival.

Engineerovation™ follows the steps of Lean Six Sigma design, with Systems Thinking and JTBD interwoven throughout:

  1. Define - The first step in the process is to identify and define the problem in detail, define the requirements for the project, and set the goals and metrics for success. This Define step includes identifying the customer(s) for your solution, especially the one who actually USES the solution to get a job done, or the "Job Executor" (JE). Next, we identify the Job-To-Be-Done” (JTBD) that the customer uses the solution to accomplish. Once we've identified the JE and JTBD, we then collaborate with your customers to clearly define and map out the steps in the JTBD in detail, and identify the customer needs (or metrics for success) associated with the JTBD. Clearly understanding the problem is 80% of the solution.

  2. Measure - The Measure phase involves using data to validate our assumptions about the JTBD and the customer needs. Now that we have identified the customers, the JTBD, and the customer needs, we implement survey-based research techniques to quantify, according to the customers, the levels of importance and satisfaction associated with each of the needs tied to the JTBD.

  3. Analyze - The Analyze phase is where we develop hypotheses about causal relationships between inputs and outputs and use statistical analysis and data to validate those hypotheses. Having gathered quantitative data regarding importance and satisfaction around the customer needs, we can now analyze that data to calculate with statistical significance the degree to which each of the needs is unmet. This positively identifies your opportunities for innovation, allowing you to develop a solution that is statistically likely to address your customers' unmet needs, eliminating guesswork.

  4. Design - Once we've identified your innovation opportunities, you can begin in a logical progression to improve your offering for your customers with the Design phase. Starting with the low-hanging fruit, we first update your branding, marketing messaging and sales materials around your current solutions that address key customer needs, so your customers clearly understand how your solutions help them get the job done. Next, we scrutinize your development pipeline and re-prioritize solutions under development, through the lens of the new unmet needs data. Lastly, you begin development of new or improved solutions to better address the unmet customer needs we've discovered.

  5. Verify - The Verify phase involves confirming the value of your new/improved solution. A quantitative survey is again employed to test with job executors the satisfaction levels associated with the solution to validate its improved effectiveness in helping customers accomplish the job to be done.

Engineerovation™ is applicable to any kind of business value enhancement activity. It can help you improve solutions you already have or develop something entirely new, from products or services to internal processes or even business models.

And perhaps the best news for innovators in the built environment is that successful innovation does NOT require creative genius or millions in disposable profits. Turns out, consistent innovation success is actually built upon some of construction's biggest strengths: Discipline, process, project management and attention to detail. Who knew?

Whether you're a building product manufacturer, a trade or general contractor, a home builder, a modular manufacturer, a prefabricator, a developer, or a construction technology provider, it can transform the way you see and experience innovation.

For more information on how to leverage Engineerovation™ to de-risk your innovation efforts, contact me at the information below. I look forward to helping you innovate the built environment with confidence.

Daniel Small

Founder & CEO

Da Vinci Consulting

(719) 321-1953

* Imagining Construction’s Digital Future, McKinsey & Company, June 2016

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